KBRA Assigns BB Ratings to Brightline East LLC’s $1.33 Billion Senior Secured Notes

9 May 2024   |   New York


KBRA assigns its BB ratings to Brightline East LLC’s $1.325 billion senior secured notes due January 31, 2030. The Outlook is Stable.

Brightline East is the indirect owner of Brightline Trains Florida LLC (Brightline Florida), the owner and operator of a 235-mile intercity high-speed passenger rail connecting Southeast and Central Florida. The notes were effectively issued by BLH Escrow 1 LLC (the Escrow Issuer), an affiliate of Brightline East, which was then merged into Brightline East substantially concurrently with closing.

Key Credit Considerations

(-) Structurally Subordinated Debt

The notes are subordinated to all debt issued by Brightline Trains Florida LLC (Brightline Florida). Concurrently with this issuance, Brightline Florida issued $2.22 billion in tax-exempt private activity bonds (PAB) with the Florida Development Finance Corporation (FDFC) as the conduit issuer. Cash distributions from Brightline Florida to Brightline East will be subject to a backward- and forward-looking 12-month debt service coverage ratio (DSCR) of at least 1.3x.

(+) Competitive Advantage

Brightline Florida connects Central Florida with the largest population centers in Southern Florida through a high-speed passenger rail system. Intermediate stops between the Miami-to-Orlando corridor include Fort Lauderdale, West Palm Beach, Aventura, and Boca Raton. Brightline Florida’s main competitive advantage over current modes of travel will be reduced travel time, including up to two hours saved between cities for certain station segments.

(+) Strong Ridership Growth in South Segment

Brightline Florida showed strong monthly growth rates between January 2018 and February 2020, reaching 74.9% in 2019. Due to COVID, service was interrupted for most of 2020 and 2021 until it restarted in November 2021. Ridership has since recovered rapidly, reaching 1.2 million passengers in 2022, or 21.5% higher from 2019 levels. In 2023, passengers in the south segment totaled 1.7 million, a 42% increase over 2022. KBRA expects ramp-up rates to remain at similar levels through 2025, and to stabilize in 2026 as the south segment reaches a more mature phase in ridership growth.

(+) Long-Distance Ridership Forecast

KBRA expects long-distance ridership in 2024 of around 760,000 passengers, compared to the sponsor’s forecast of over 2.5 million. For future years, KBRA’s rating case uses conservative assumptions in terms of ramp-up rates on long-distance trips versus the sponsor’s forecast, with long-term ridership forecasts 20% lower than the sponsor’s base case. The transaction shows strong resiliency across the KBRA rating case and different sensitivity scenarios.

Rating Sensitivities

A ratings upgrade is unlikely given the structural subordination of the notes to all debt issued at the Brightline Florida level.

We could lower the ratings if there were lower-than-expected ridership and/or revenues, a more prolonged ramp-up period, or higher operating costs than forecast in KBRA’s rating case that reduce Brightline Florida’s DSCRs below 1.3x.

ESG Considerations

Environmental Factors

Brightline Florida’s passenger rail service is estimated to represent a 75% reduction of CO2 emissions per passenger kilometer compared to car transportation. Therefore, the transaction could potentially benefit from future regulation to address carbon limits and promote public transportation.

Social Factors

Traveler preference toward cleaner and more efficient ways of travel could benefit Brightline Florida’s ridership, especially if such preference changes are permanent. However, given the high exposure of the passenger rail industry to economic cycles, ridership could be impacted by economic downturns that result in rising unemployment and a reduction in disposable income.

Governance Factors

Brightline Florida’s management team comprises professionals with a wealth of experience in the transportation and hospitality industries. Further, the company’s construction management and operating teams come from diverse backgrounds with experience in some of the largest rail systems in the country, in addition to benefiting from Siemens engineers on site 24/7.

Rating Rationale

KBRA’s rating case expects the notes to have average consolidated DSCRs of 1.26x without accounting for the balance available in the RURA, and average consolidated DSCRs of 1.47x when giving credit to cash available in the RURA. Upon maturity, KBRA considers there will be sufficient residual value to refinance the notes, as reflected by the DCF/debt ratio of 6.20x under the rating case. These coverages, along with an Average KPRS, are sufficient to support BB ratings on the notes. Despite KBRA’s conservative scenario, should ramp-up rates be lower than expected under the KBRA rating case, the project’s cash flow profile could be severely impacted, limiting its resiliency in downside scenarios.


The Stable Outlook reflects KBRA’s conservative ridership scenario over the next 18 months, and KBRA’s expectation that cash flows are distributed to Brightline East in every payment date under the rating case. A ratings upgrade is unlikely due to the structural subordination of the notes to any existing and future debt issued by Brightline Florida. A ratings downgrade over the next 18 months is unlikely due to the strong liquidity provided by the prefunded interest reserve and the RURA in the first years of the financing. However, if these reserves are funded in amounts substantially lower than expected, we could lower the ratings.

To access rating and relevant documents, click here.

Click here to view the report.



Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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